The funds listed above may have recent negative performance. View current performance here.

Not all investors are eligible to purchase shares at Net Asset Value (without a sales charge). Load-waived ratings apply only when investors are eligible to purchase shares without the sales charge or for existing shareholders who have already paid the sales charge. Unless indicated as "load-waived", ratings include a maximum sales charge. Consult a current prospectus for details on reduced/waived sales charges and breakpoints.

Ratings listed above are as of 6/30/2015. Past performance does not guarantee future results.

Morningstar proprietary ratings reflect historical risk-adjusted performance for funds with at least a 3-year performance history and are subject to change every month. Morningstar Ratings (TM) are calculated from a fund's three-, five-, and ten-year average annual returns in excess of the 90-day U.S. Treasury bill returns, with appropriate fee adjustments, and a risk factor that reflects performance below the 90-day Treasury bill return. Within each asset class the top 10% of funds receive 5 stars (Highest); the next 22.5% receive 4 stars (Above Average); the middle 35% earn 3 stars (Average); the next 22.5% receive 2 stars (Below Average); and the bottom 10% get 1 star (Lowest). The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Copyright 2012 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

The number of U.S.-domiciled funds tracked by Morningstar in the following categories for periods ended 06/30/2015 are as follows: the Conservative Allocation category consisted of 676 funds for the three-year period, 549 funds for the five-year period and 307 funds for the ten-year period; the Aggressive Allocation category consisted of 389 funds for the three-year period, 328 funds for the five-year period, and 225 funds for the ten-year period; the Target Date 2000-2010 category consisted of 117 funds for the three-year period, 110 funds for the five-year period, and 40 funds for the ten-year period; the Target Date 2016-2020 category consisted of 195 funds for the three-year period, 170 funds for the five-year period, and 52 funds for the ten-year period; the Target Date 2026-230 category consisted of 195 funds for the three-year period, 171 funds for the five-year period, and 57 funds for the ten-year period; the Target Date 2046-2050 category consisted of 194 funds for the three-year period, 170 funds for the five-year period, and 52 funds for the ten-year period; the Large Value category consisted of 1,185 funds for the three-year period, 1,045 funds for the five-year period, and 734 funds for the ten-year period; the MidCap Growth category consisted of 657 funds for the three-year period, 585 funds for the five-year period, and 451 funds for the ten-year period; the Small Value category consisted of 365 funds for the three-year period, 305 funds for the five-year period, and 198 funds for the ten-year period; the Foreign Large Blend category consisted of 668 funds for the three-year period, 584 funds for the five-year period, and 331 funds for the ten-year period; the Global Real Estate category consisted of 187 funds for the three-year period, and 154 funds for the five-year period; the Real Estate category consisted of 232 funds for the three-year period, 199 funds for the five-year period, and 151 funds for the ten-year period; the Intermediate-Term Bond category consisted of 935 funds for the three-year period, 811 funds for the five-year period, and 593 funds for the ten-year period; the Muni California Long category consisted of 68 funds for the three-year period, 67 funds for the five-year period, and 53 funds for the ten-year period; the Intermediate Government category consisted of 303 funds for the three-year period, 273 funds for the five-year period, and 224 funds for the ten-year period; the High Yield Bond category consisted of 611 funds for the three-year period, 516 funds for the five-year period, and 362 funds for the ten-year period; the Muni National Long category consisted of 281 funds for the three-year period, 236 funds for the five-year period, and 166 funds for the ten-year period, the Mid-Cap Value category consisted of 429 funds for the three-year period, 370 funds for the five-year period, and 242 funds for the ten-year period; the Small Blend category consisted of 636 funds for the three-year period, 575 funds for the five-year period, and 377 for the ten-year period; the Diversified Emerging Markets category consisted of 549 funds for the three-year category, 351 funds for the five-year category, and 167 funds for the ten-year category.

This document represents a limited selection of the Principal Funds & Portfolios that are rated by Morningstar. Many of our other Funds, Portfolios and share classes are also rated by Morningstar, but may not be rated as highly as the Funds included in this document.

Lipper Peer Comparison

As of March 31, the following percentage of Principal Funds were in the top half of their respective Lipper categories for the time periods indicated below:

1-year: 73.2% of A shares were in the top half (30 of 41)

3-year: 66.7% of A shares were in the top half (24 of 36)

5-year: 70.6% of A shares were in the top half (24 of 34)

10-year: 84.6% of A shares were in the top half (11 of 13)

The Principal Funds in the table below ranked in at least the top half of all funds in one of their respective Lipper categories over different reporting periods. They're just a few of the 50 funds (A shares) in the Principal Funds family.

* The full name of this fund is the Principal Capital Appreciation Fund.

1 Equity investment options involve greater risk, including heightened volatility, than fixed-income investment options. Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise.2 Fixed-income investments are subject to interest rate risk; as interest rates rise their value will decline.3 Small and mid-cap stocks may have additional risks including greater price volatility.4 International and global investing involves greater risks such as currency fluctuations, political/social instability and differing accounting standards.5 Fixed-income investment options are subject to interest rate risk, and their value will decline as interest rates rise. Lower-rated securities are subject to additional credit and default risks. International investing involves increased risks due to currency fluctuations, political or social instability, and differences in accounting standards. REIT securities are subject to risk factors associated with the real estate industry and tax factors of REIT registration.

Many of our other Funds, Portfolios, and share classes are also rated by Lipper, but may not be rated as highly. Lipper rankings are based on total returns and do not reflect the inclusion of sales charges. If sales charges were reflected, rankings could be lower. Fund ranking calculated quarterly or annually by Lipper Inc. of New York. Each fund is ranked within a universe of funds similar in investment objective. Lipper Inc. is a nationally recognized organization that reports on mutual fund total return performance and calculated fund rankings. In instances Class A performance and extended performance do not correspond, the Lipper ranking is based upon the original class of shares adjusted for Class A expenses.

t14060401h3

To obtain a prospectus, download online or call Sales Support at 1.800.787.1621

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Sales Support at 1.800.787.1621.